Five Components of Service Management

Date: Feb 15, 2017

Service management is usually defined as the point in a supply chain that connects sales and customers, but in recent years the concept has morphed from a fairly narrow aspect of overall management and strategy to a broad management orientation that addresses all facets of an enterprise, particularly in service industries. Beginning in the early 1980’s, Christian Grönroos of the Hanken School of Economics in Finland started developing a “framework of values” for service management, a set of principles which, if integrating correctly into the company’s strategy and operations, leads to good service delivery. There are five parts to the framework of values for service management:

An overall management perspective

This requires a shift in the broad priorities of the firm from an internal focus on process efficiencies, economies of scale, and cost management to an external focus on customers’ perspectives on core product quality and total firm performance. Grönroos’ entire thesis is that the classical scientific management handed down to us by the likes of Adam Smith emphasizes division of labor, which can and often does result in separate parts of the enterprise working at cross-purposes. The service management perspective, by comparison, establishes customer service as the overall goal throughout the organization so that even if the efficiencies of the division of labor are employed, they are necessarily done so in the context of their impact on the broader objective. At first blush, this particular part of the framework might sound like a vague motherhood statement, but it is actually important because it establishes the basis for the other parts of the framework of values.

Customer- or market-driven performance measures

The big difference between a ‘service management’ orientation and the best practices suggested by classical scientific management is that performance measurement must have an external perspective, rather than being based on goals related to internal efficiencies. Well-known performance management and planning tools such as CSFs and KPIs still work very well from a service management perspective, but only if the success factors and performance indicators down to the level of the individual employee are expressed in terms of what each segment or position in the organization contributes to customer service. In essence, every role within the organization in some way becomes a customer service position.

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Quality management is not segregated from ‘normal’ management functions

This part of the framework is perhaps more applicable to manufacturing or other production firms where a distinct quality control process is required, but otherwise, the concept of integrating quality control functions into normal workflow simply reinforces the perspective of the first two parts of the framework. This aspect of the service management perspective is also perhaps more familiar than most; we see it in practice quite often through ideas such as Total Quality Management. The biggest change it requires from the organization lies in operational planning, because quality control functions – where distinct procedures are required – must be broken down and smoothly fit into a unified, overall process.

Internal development of personnel

This concept has become almost canonical in human resources management and relates to service management in two critical ways. First, it is the primary means by which customer service perspectives and goals can be properly spread throughout the entire organization, and is a key link in the service-profit value chain (discussed in greater detail in another article). Higher levels of employee experience, skill, and satisfaction lead to greater efficiency and employee loyalty, which positively affect service quality in a number of ways. Second, it is virtually impossible to effectively implement quality management functions as described above into an enterprise-wide process without using internal human resources; the best people for the job in any organization are the ones the organization already has. Just as with quality management, personnel development requires the integration of HRM functions that are usually treated separately into mainstream processes, at least at the planning level.

Flat organizational design

The service management framework emphasizes cross-functional abilities, internal collaboration, and lateral communication, and as a result, tends to discredit the effectiveness of hierarchical organizations for achieving customer service quality. This presents a significant management challenge in organizations where the scientific management perspective of specialization and division of labor is an unavoidable necessity, such as in businesses where core functions require highly skilled workers who have intensive specialized training. Cross-functional training at an airline, for example, can only go so far; it would be ridiculous to consider putting ticket counter personnel behind the controls of a jet airliner just “to get a feel for what others’ job roles are like”. But on the other hand, there is little to prevent a highly-skilled airline pilot from spending a few days behind the counter to experience a different side of customer service.

Some criticisms of the service management framework of values

One implication of the service management perspective is that it greatly increases the complexity of planning and strategy in an organization; many of the boundaries between different departments or functions disappear entirely, and everything initiative from the level of individual employees upward must be complementary. This is the underlying reason why the framework has never been modeled in any great deal; an effective model would require consideration of a very large number of variables, and might be too unwieldy to be useful. And without a model, the framework is just another qualitative concept that does not give much direction for practical application.

Another reason the framework has not received as much academic or practical attention as it deserves is somewhat unfair; Professor Grönroos’ discipline is marketing, not management, and in his various writings, he tends to stay in his comfort zone when seeks examples to illustrate the points he is making. Management scholars seem to have a bias that relegates marketing to a niche within the broad realm of business studies, and so have possibly overlooked the greater application of the ideas developed by “a marketing teacher.” Which, if nothing else, is a good reminder for business students not to impose limits on their explorations of knowledge – just as the framework of values suggests, one’s own effectiveness can be greatly increased by cross-training.

Read more about service management:Grönroos, C. (1994). From Scientific Management to Service Management. International Journal of Service Industry Management, 1(5).

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